Under the revised rules, directors can return to the same bank’s board only after a three-year gap and cannot remain associated with the bank in any other capacity during this period except as members or customers. The move follows the Banking Laws (Amendment) Act, 2025, which raised the maximum tenure limit from eight to ten years for directors of co-operative banks.

The Reserve Bank of India has tightened governance norms for co-operative banks by introducing a mandatory three-year cooling-off period for directors of Urban Co-operative Banks (UCBs) and Rural Co-operative Banks (RCBs) after they complete 10 continuous years on the board.

This, however, shall not preclude the director from being appointed as a director on the Board of another bank, if otherwise eligible, per the Reserve Bank of India (Urban Co-operative Banks - Governance) Amendment Directions, 2026, and the Reserve Bank of India (Rural Co-operative Banks - Governance) Amendment Directions, 2026.

The three-year cooling-off period has been brought in,, as in a few cases directors have been found resorting to certain methods to circumvent the provisions of the Banking Regulation (Amendment) Act, 2020.

In this regard, the RBI highlighted that some directors resigned briefly from office and got re-elected / co-opted to the Board within a short period of time, thereby continuing to be on the Board of a UCB/ RCB for an extended period beyond the legally permissible tenure, which defeats the intent and spirit of the statutory provision.

A director on the Board of a UCB/ RCB, after completing a continuous tenure of ten years in office, shall be eligible to be re-appointed, whether by election or co-option or in any other manner, as a director on the Board of the same UCB/RCB only after undergoing a minimum cooling-off period of three years.

During the cooling-off period, the said director shall not be associated with the UCB/RCB in any capacity / manner other than as a member / customer. This, however, shall not preclude him / her from being appointed as a director on the Board of another bank, if otherwise eligible.

Published on May 25, 2026